Recruiting Blog

April 6, 2018

Job Report 103K New Jobs Last Month | More Recruiting Needed

Job hiring slowed in March with only 103,000 new hires. This was the smallest recruitment gain in six months according to today’s monthly Labor Department job report. This contrasted with February’s robust recruiting gain of 326,000, after revisions, which was the strongest monthly performance since 2015.

Despite this month’s trivial job gain, unemployment rate held steady at a 17-year low of 4.1%. This remained at its the lowest level since December 2000 for the sixth straight month.

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Several Good Job Signs So Far This Year

“For the past several months the labor market has been on fire,” said Joseph Brusuelas, chief economist at consulting firm RSM US LLP. “Which given where the economy is in the business cycle amidst a tight labor market is simply not sustainable.”

The March hiring figure is more consistent with expectations nearly a decade into an expansion, he said. Employers only need add about 80,000 jobs a month to keep the unemployment rate stable.

Through the first three months of the year, employers have added an average of 202,000 workers to payrolls a month, outpacing 2017’s average monthly growth of 182,000.

U.S. employers have added to payrolls for 90 straight months, extending the longest continuous jobs expansion on record.

Despite Increased Job Growth, Wage Growth Still Paltry!

A tighter labor market should produce better wage growth, as firms compete for scarce workers. There are some signs of this with wages rising faster than they did earlier in the expansion. However, they still remain below long-run averages.

Average hourly earnings for all private-sector workers rose 2.7% from a year earlier in March. However, those raises have been skewing toward managers. The annual gain in wages for non-supervisors was only 2.4%, a pace that has held steady since December.

Hourly wages haven’t increased at better than a 3% rate from a year earlier since the recession ended in 2009. The last time unemployment was as low, in late 2000, non-supervisor wages had risen 4.3% from a year earlier.

A longer average workweek, from a year earlier, pushed up weekly wages at the best annual pace since 2011. But the gain in weekly paychecks for non-supervisors decelerated in March, from February.

Employers have been able to hold wage gains in check in part because they have expanded the pool of available labor, drawing in Americans who have been out of the labor market, such as those with criminal histories and stay-at-home parents.

But In March, The Labor Force Shrank!

The share of American adults working or looking for a job fell by 0.1 percentage point to 62.9% in March. That rate is up from a recent low of 62.3% in 2015, but still near the smallest share of adults participating since the late 1970s, a time when women were still entering the workforce in greater numbers.

“You’re really only starting to see employers broaden out their search and begin to invest in more training for workers,” said Susan Helper, an economist at Case Western Reserve University. “We’ve not yet reached the levels of employer desperation we saw in 2000.” She recalled stories of hiring agents standing outside prison gates, waiting for inmates to be released nearly two decades ago.

A broad measure of unemployment and underemployment that includes Americans stuck in part-time jobs or too discouraged to look for work fell to 8.0%, from 8.2% the prior month. That rate, known as the U-6, remains somewhat elevated compared with the last time the unemployment rate was similarly as low. In December 2000, the broader measure was 6.9%.

Job Gains In Several Sectors

Friday’s report showed manufacturers added 22,000 jobs, continuing a streak of strong gains. Employment also grew in mining, including oil-related jobs, and health care. Employment at construction firms fell in March after rising sharply in February, a sign that an unusually warm February followed by a cool start to spring, could be affecting monthly numbers.

All levels of government added 1,000 jobs last month.

Despite the March hiring slowdown, the labor market remains a relative bright spot, as it has for most of the economic expansion that began in mid-2009. More broadly, recent signals on the economy’s health have been mixed. Consumer-price increases are edging toward a healthy level consistent with solid demand and the manufacturing sector is growing. But consumer spending has eased as Americans save more, and new and evolving trade policies have caused unrest in the financial markets.

Still, the combination of tax cuts and higher government spending should support additional hiring and wages gain this year, said Carl Tannenbaum, chief economist at Northern Trust.

“The tax law is going to push the demand side of the economy harder,” he said. “And that’s going to allow job creation to remain pretty robust.”